AirBnB October Performance

AirBnB - October 2018

We converted our home to an AirBnB in September.  I've had no problems at all getting bookings, but rates need to be higher.  When I went live I offered super low rates and a 20% discount to the first three bookings.  One of those bookings was for 28 days in October.  The guest paid a super low rate (less than what I would have earned if it was a long-term rental).  This of course impacted my income.

My business plan for now continues to be to maximize bookings, even if that means the nightly rate is lower than it needs to be.  In October I was going to have one night vacant, so I adjusted the rate by 5% to get it booked.  I want to generate more guest reviews, get a good system in place for turning the property over, and stay high on AirBnB's search results.  The strategy I'm going with now is to offer a competitive rate (but higher than when I started in September) and then make adjustments on vacant days if it looks like no one is going to book for that day.

Expenses should start to go down.  In October, I had to remove a very large oak tree that was hit by lightning.  I also stocked up on extra linens and other supplies.

Financial Performance

My 28 day booking took up most of the month, which lowered my income considerably due to it being heavily discounted.

Occupancy Rate:  100% (31 of 31 days booked)

Payments Received:  $1,489

Expenses:  $2,731

Net Loss:  $1,242

My Frugal Miser - October Expenses: $4,525

It's hard to tell, but our expenses are stating to settle down to what will be a normal level.  I still need a few things for the new house, but it is pretty much furnished now. 

Looking at my spending categories, some notes:

• I use a lot of gas making deliveries for Amazon.  
• Food spending was too high.  Need to work on that.
• We took a quick vacation to the Los Angeles area.
• I bought expensive tickets to see Cher in Louisville, KY.  I also bought airfare for the two of us.  Why Louisville?  I looked at several cities that were easy to travel to from Tampa, and Louisville had the best seats available.
• Utilities won't be this high usually.  I had to make a large deposit to get the power turned on at the new house.

October Expenses:  $4,525

$430 Auto (service, gas, insurance, AAA, etc.)

$2 Bank Fees
$0 Clothing

$0 Computer

$646 Entertainment (movies, gambling, alcohol, concert tickets) 

$732 Food

$0 Gifts Given

$756 Household/Mortgage Payment/Home Repair
$0 Homeowner's Insurance (annual payment)

$121 Health and Dental Insurance

$0 Investment Expense
$11 Interest Expense*

$0 Medical/Dental

$0 Miscellaneous

$0 Personal Care

$16 Subscriptions

$1,819 Taxes (Quarterly Tax Payment)
$25 Sharing Economy Expenses (tolls, car washes, etc.)
$55 Unreimbursed Employee Expenses

$596 Utilities

$1,135 Vacation

*Interest expense includes student loans.  As the rate is below 2%, I am completely comfortable paying the interest each month and investing the money that I would otherwise use to pay off this loan.  

My Frugal Miser - October Income: $11,920

October marked another outstanding month.  Including both income and investment account gains, I made over $25,000.  Here are some highlights:

• Sears filed for bankruptcy, resulting in a pop in the value of the Put Options I have.
• Every property was rented and rent payments were received on them all.  
• The first full month of AirBnB income was good.  I'm still figuring out optimal nightly pricing, and expect to earn even more as time goes on.
• Meeting work and Amazon deliveries represented solid earned income.

October Income: $11,920

$33 Mystery Shopping
$1,178 Meeting Jobs
$31 Reimbursed Job Expenses
$37 Uber
$0 Lyft
$0 Postmates
$18 Doordash
$2,128 Amazon Deliveries
$6,856 Rental Income
$1,489 AirBnB Income
$19 Interest Income

$132 Other Sources

Investment Accounts Change in Value:  $13,875

Notes:  

• I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.

AirBnB September Performance

Our goal is to generate enough passive recurring income to be truly financially independent.  We are getting super close to reaching this goal:  the first milestone I'd like to hit is to consistently receive $10,000 per month in passive recurring income.

Passive Recurring Income (PRR):  Money I receive with minimal effort.  Meeting jobs, Amazon deliveries, etc. are NOT passive.  Stock dividends, long-term rental income, and our new AirBnB property represent the bulk of our PRR right now.

AirBnB is Live!

Last month we moved to our new house and went live with the AirBnB.  I expect this short-term rental to be an important contributor to our financial independence.

I want to nurture this business to give it the best chance of being hugely successful.  I went promo-heavy, offering a 20% discount for the first 3 bookings, and I kept the nightly rates super low to attract reservations.  I did this to generate traffic, which helps in several ways:  

• First, most guests want to see reviews before they reserve a vacation rental.  I needed to lure in my first guests to generate reviews.   In September the home received 4 reviews, and they were all 5 star ratings!
• Second, AirBnB uses an algorithm to decide which listings are prominently displayed in search results.  My home is in Largo, FL, adjacent to Clearwater, which I suspect is the city most people use when searching for a home in this area.  Keeping it prominent means my Largo home shows up on the map when a guest is looking at Clearwater homes.  
• Another benefit (not sure if this is helpful or not) is that, since I generated so many reservations early on, my home is already considered a "Rare Find" on AirBnB.

My business plan for now is to maximize bookings, even if that means the nightly rate is lower than it needs to be.  I want to generate more guest reviews, get a good system in place for turning the property over, and stay high on AirBnB's search results.  Secondarily, I'm going to keep testing rate increases to determine the true market value of my home.  Some of the first bookings were incredible bargains:  $38/night for a 3 bedroom, 2 bath house.  But I have already begun increasing rates.  The latest bookings have been averaging close to $70/night.

Financial Performance

September 11th was our "go live" date.  From the 11th through the 30th, I blocked 4 days from being available (we were out of town).  Every other day was occupied.

Occupancy Rate:  100% (18 of 18 days booked)

Payments Received:  $736

Expenses:  $3,072

Net Loss:  $2,336

Like I said, early reservations were at bargain-basement rates.  Also, the house was only available for 18 nights.  The monthly income from this home will be much higher moving forward.  Expenses were very high because I've never been an AirBnB before.  We bought multiple sheet sets, pillows, and supplies to stock the home.  Expenses will decrease over time.  In fact, in October I expect to receive more income than I spend.  Profit in the second month?  I'll take that!

I plan to do a monthly post about this exciting new income stream.  If there is something I have left out that you would like to see, please let me know in the comments.